News
26 Feb 2016 10:30am

KPMG axes 50 partners in overhaul

KPMG is letting go approximately 50 of its UK-based partners

The move is an attempt by chairman Simon Collins to overhaul the firm’s operating model by investing in technology and other areas likely to deliver long-term benefits following a tough year.

A spokesperson for the firm said, "While we are accelerating the retirement of approximately 50 partners during the early part of this year we nevertheless continue to hire new partners and staff. In 2015, we hired just under 3,000 staff and are currently hiring around 1,000 new roles. We have hired three partners this year and have plans to hire more in the coming months and in addition we have our normal cycle of partner promotions."

They added, "As one of the largest providers of professional services, we regularly review and reshape our skills and expertise to ensure we have the right people to grow our business in the changing market place. As we have pursued opportunities in new areas such as technology and regulatory reform, we have grown revenues (for example tax saw double digit growth in 2015) and staff. In 2015, the chairman announced significant changes to the operating model to enhance the firms ability to seize growth and opportunity."

According to Sky News, who first reported the news, the decision to downsize was met with support within the firm as many of the exiting partners are at or near retirement.

KPMG saw its profits fall 7% to £383m in the year to 30 September 2015 and was overtaken by EY making it the smallest of the Big Four firms.

The firm said the dip was the result of investment in acquisitions, property, and staff training and development.

KPMG invested a total of £196m in acquisitions, property and staff training and development as part of its three-year grow strategy to reposition the business in its markets.

As a result, while profits in audit rose 9% to £197m and tax saw a 17% increase to £151m, profits in advisory decreased 5% to £308m.

KPMG managed to secure new audit appointments including Barclays, Experian and British American Tobacco, making the firm the top auditor of listed companies in the UK.

Average partner remuneration was also hit, falling 13% to £623,000. The firm also blamed a decrease in the advisory business’ performance.

The firm hit the headlines again late last year when four of its most senior partners in Ireland, Jon D’Arcy, Eamonn Donaghy, Arthur O’Brien and Paul Hollway, were arrested in connection with suspected tax evasion.

The four partners were subsequently placed on administrative leave by the firm and in January this year, McCoy, KPMG’s former head of investment advisory, left the Big Four firm.

McCoy was among 10 people charged with conspiring to cheat HMRC out of tax, following an investigation by the Revenue.

In a dramatic month for the firm, the Financial Reporting Council (FRC) also launched an inquiry into KPMG and its audit of HBoS’s accounts.

The probe will focus on the Big Four firm’s auditing of the bank and why it granted it “going concern” status in 2007 a year before it had to be bailed out following the financial crash.

Despite KPMG being vindicated in a joint report from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in November, the FRC came under renewed pressure to investigate the firm.

Sinead Moore

 

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